Maximising Nigeriaâ€™s Economic Potential for Change

Eromosele Abiodun writes that the federal governmentâ€™s transformational agenda, which is hinged on reform of critical sectors of the economy, will drive the required change in Nigeria.

After many decades of stagnation, the Nigerian economy has been growing consistently at 6.7 or 7 per cent in the last three years. The country has enjoyed stable macroeconomic stability and inflation is at all time low.

These have fuelled optimism by stakeholders about the Nigerian economy, which is being seen as turning the corner. Policy makersâ€™ focus is shifting from an oil-led, public sector-dominated, economic management to a more sustainable private sector driven growth.

Even the impending general elections slated for 2015 has not dampened the enthusiasm of both local and foreign investors as well as officials of governments that the Nigerian economy, long held down by many constraints, may finally be shaking off its perennial shackles to join the league of the fastest growing economies in the world.

Added to this is the recent classification of Nigeria as one of the MINT countries, which also includes Mexico, Indonesia and Turkey. The MINT countries are expected to experience the fastest rate of growth and development in the next decades, coming on the heels of the phenomenal growth in the economies of the BRIC countries that include Brazil, Russia, India and China.

No where in recent times has this optimistic view of Nigeriaâ€™s growth potential been expressed as it was at the recently concluded Standard Bank West Africa Investorsâ€™ Conference which held in Lagos.

The conference, in its fifth edition, serves as the bridge that connects local and global investors to business opportunities in West Africa, with particular focus on Nigeria. Minister of Trade and Investment, Mr. Olusegun Aganga, while delivering the keynote address, highlighted some of the policies that have underpinned the gradual, sometimes challenging transformation of the Nigerian economy.

Reforms in the power, transport, ports, and industrial sectors, among several others, are shaping to make Nigeria more competitive because it is only by being competitive that Nigeriaâ€™s economy will be revolutionised.

For many decades, according to the minister, Nigeria did not address the fundamental constraints to competitiveness â€“as a result, businesses struggled, product standards were weak, jobs were exported, and economic growth was not inclusive.

The state of infrastructure, particularly power and domestic freight, made it less competitive to run many businesses locally. Nigeria did not have a well-defined trade policy that was integrated with a clear investment policy, and a detailed industrial policy and strategy -these are the reasons why the country has had challenges with poverty, unemployment, and more recently security.

A Turnaround

However, according to Aganga, a turnaround is taking place.

â€œI am pleased to let you know that this government is taking Nigeria in a new direction. A direction that unlocks the economy driven by sectoral policies; a direction that facilitates growth through competitiveness, and a direction that makes Nigeria ready to deliver, because it is â€˜time to deliverâ€™

“Since coming into office in 2011, we have decided to do things differently. The Nigerian government is taking Nigeria beyond oil, as declared in the Transformation agenda. We believe that it all starts and ends with competitiveness. It is competiveness that will revolutionize the Nigerian economy,” he said.

The turnaround and continuous improvement in the economy are expected to accelerate Nigeriaâ€™s development thereby propelling the country into the MINT economic frontier as predicted by Jim O’Neill of Goldman Sachs. MINT, a neologism that stands for Mexico, Indonesia, Nigeria and Turkey, will witness the next round of rapid economic growth after the BRICs â€“ Brazil, Russia, India and China.

Oâ€™Neill had recently said: â€œNigeria is a middle-income, mixed economy and emerging market, with expanding financial, service, communications, and entertainment sectors. It is ranked 30th (40th in 2005, 52nd in 2000), in the world in terms of gross domestic products (GDP) at purchasing power parity as of 2012, and 3rd largest within Africa (behind South Africa and Egypt), on track to potentially becoming one of the 20 largest economies in the world by 2020. Its re-emergent, though currently under-performing, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African region.â€

Standard Bankâ€™s Influence

As attested to by Aganga, the thrust of the governmentâ€™s transformational agenda is to reform critical sectors of the economy and facilitate private sector expertise and investments to drive the required change. Institutions such as Stanbic IBTC, through its parent company, the Standard Bank Group, with a rich legacy of transforming economies across Africa by supporting the private sector and funding strategic economic initiatives, will be important to helping the government actualize its transformation agenda.

That is where initiatives such as the standard Bank West African Investors Conference are critical to the success of the transformation agenda because they not only provide the platform for interaction between organizations and investors, the conference also facilitates investments from international and local portfolios in opportunities in Nigeria.

Beyond organising the annual conference is Stanbic IBTCâ€™s role in Nigeriaâ€™s socio-economic development, which cuts across different segments and demographics. From funding projects in the energy sector to industries, and also expanding its retail product offerings to give access to individuals and businesses in the small and medium scale enterprises sector to finance and advisory services, Stanbic IBTCâ€™s role in engendering growth and development in various facets in the country is being deepened as the years go by.

For instance, it recently signed a N56 billion ($350 million) financing deal with GE to provide adequate power to industrial zones, as well as Small and Medium Enterprises across the country, in line with the Nigerian Industrial Revolution Plan.

The deal will lead to early delivery of power to identified industrial clusters, thereby meeting the need of industries in the clusters for regular and sufficient power, which will boost productivity and employment, and ultimately, economic development.

International Investors

Focusing the attention of leading local and international investors on opportunities available in Nigeria is as important as engendering the right environment conducive for businesses to thrive in the country.

Opportunities to invest in a particular country may abound, but without a proper, focused and institutionalized approach to directing investors to the opportunities, the required funds may not be attracted to the sectors that need them. Indeed, this was clearly demonstrated by Chairman, Stanbic IBTC Holdings, Atedo Peterside, when he talked about the power reforms and the opportunities for investors at the investorsâ€™ conference.

He said: â€œFor many years power has been the bane of businesses in Nigeria, and was left unaddressed. This administration has however tackled power supply head on. For the first time in Nigeriaâ€™s 53 year history, Nigeria successfully privatised the electric power industry, and is bringing in capital, technology, and operational excellence into the sector.

â€œAs a result, 11 distribution companies, and four generation companies have been privatized, for over US$3billion; other generating plants in the NIPP programme will also be privatized soon. These electricity assets were physically handed over to private owners on 1st November 2013. Privatization is just the beginning in Nigeriaâ€™s power sector, as we now have a pipeline of approximately $50 billion of investments lined up to go into the Nigerian power industry in the next few years.â€

Peterside also highlighted reforms and opportunities in other sectors of the economy such as agriculture, transport, ports, which have gone at least 40 days to clear a cargo, because port officials worked from 9am-5pm, to the current situation to clearing cargo in one week since it is now a 24-hour service.

He went further to illustrate the potential in investing in Nigeria with the example of telecoms services which were fully privatized in 2011.

â€œDespite the frustrating pace of some of the reforms, we can arguably take some comfort from Nigeriaâ€™s track record to date in instances when the private sector has been sufficiently enabledâ€¦.The telecoms revolution is something to which we can all attest to with 119 million active GSM lines from a standing start 13 years ago, â€Peterside said.

The economic benefits provided by the annual Standard Bank Investorsâ€™ Conference are immeasurable when viewed against the background that it is perhaps the only major platform in Nigeria that attracts such high calibre investors, and also points them to opportunities that they may hitherto not see.

Several years to come, when the success story of Nigeriaâ€™s economic transformation, growth and development is written, and the role the private sector played in facilitating the change, Stanbic IBTC and the Standard Bank Group to which it belongs, and its annual investorsâ€™ conference, will receive a fair mention.

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